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Duquesne on track for Act 47 recovery

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By Jennifer R. Vertullo
Thursday, Jan. 30, 2014, 4:41 a.m.
 

An updated draft of Duquesne's Act 47 plan indicates the city may be relieved of its financially distressed status within the next five years.

Duquesne, which filed for municipal bankruptcy in 1993, has made progress over the past two decades to increase its revenues and curtail its expenditures. By continuing that effort and crossing their fingers for a favorable economy, city officials believe an end is in sight.

During a public hearing to review a draft of the city's 2014-17 financial recovery plan on Wednesday, Act 47 coordinator Jonathan Ingram of the Ohio-based Novak Consulting Group said there is potential for a bright future.

“The city of Duquesne may be in a position to move out of the Act 47 program over the next five years,” his report indicated. “However, there are a number of critical initiatives that must be accomplished before that can happen.”

The city is on track to wind down its recovery program, but Ingram said finalizing the process is contingent upon the cooperation of many internal and external factors — and “even a little luck.”

He set the scene by presenting external conditions that city officials cannot control: moderate increases in health care costs, economic improvement in Mon Valley communities, development of the RIDC Riverplace City Center of Duquesne, earned income tax revenues, and achievements within Duquesne City School District.

He recommended that Mayor Phil Krivacek and council should consider no increases in full-time staff unless they can be supported entirely by new revenue sources, increasing wages and salaries within the rate of inflation, keeping departmental expenditures within budget, boosting collection rates for fees and taxes to 90 percent by 2015, and eliminating the discrepancy between wholesale water costs and collected water fees.

“You all have done a very good job of trying to keep your expenditures within your revenues,” Ingram told council. “But you do want to maximize the amount of revenue you can bring in.”

Many of the goals for financial recovery are spread over the updated plan's four years, but Ingram said the issue of water discrepancies should be handled immediately.

“The general fund actually supports the water fund, because the amount of water you purchase ... is greater than the amount of water you bill for,” Ingram said, revisiting an issue that city officials have discussed many times.

Within the first quarter of 2014, he hopes to find funding to study the city's water lines and to test meters.

Krivacek asked if funding will be available to complete whatever improvements are identified by the study.

“We know we need new water lines in this city,” he said. “There are too many little leaks around town, and these lines are 100 years old.”

In recent years, the city was offered a low-interest loan to replace water lines, but officials turned it down because the city did not have enough revenue to support 20 years of repayment.

This time around, Krivacek said, the city will push for grant money rather than a loan. Ingram confirmed that the city's Act 47 status has weight when seeking state funds to fill recommendations that are directly related to its financial recovery plan.

The mayor asked for Ingram's support as the city powers through its last few years of financial recovery.

“I think you have a good staff, and a lot of the future indicators are good,” Ingram said. “But I think there are some things we can do to push the ball forward.”

Council expected to adopt the plan's amendment in February. Krivacek said city officials will stick to as many of its recommendations as possible in order to move efficiently toward recovery as they hope for economic improvement in the region.

“It's not just us,” Krivacek said. “Everyone along the (Monongahela) river is having problems, and I don't know why people are afraid of Act 47. They don't understand how it works. It's not a stigma on you. Act 47 has kept us afloat for many years.”

Jennifer R. Vertullo is a staff writer for Trib Total Media. She can be reached at 412-664-9161 ext. 1956, or jvertullo@tribweb.com.

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